Breach of Trust Conditions/Undertakings

What is a trust condition and an undertaking?

In legal transactions, money and property change hands. The lawyer’s role is to hold documents and property in trust until the performance of particular conditions. These conditions are called ‘trust conditions’. Promises by lawyers to carry out certain tasks and/or fulfill certain conditions are known as ‘undertakings’.

For example, in the sale of a residential property, the seller’s lawyer sends the documents signed by the seller transferring the land over to the buyer’s lawyer on several ‘trust conditions’. The trust conditions must be fulfilled before the buyer’s lawyer can register the land transfer. The most important trust condition in this example is that the buyer’s lawyer must ensure that they have the money in place for the seller before registering the transfer of title.The buyer’s lawyer ensures that the seller’s lawyer gives ‘undertakings’ or promises to do particular things such as ensuring that any interests on the land which may attach to the land (such as writs, caveats/interests, and mortgages) are removed so that the buyer will receive “clear title” to the land they are purchasing.

If a lawyer is unable or unwilling to honour a trust condition imposed by someone else, the subject of the trust condition (the money, the signed documents, etc.) should be immediately returned to the person imposing the trust condition, unless the lawyers can quickly agree, and confirm in writing, to change the trust conditions.